Influences in the Business Environment Flashcards

1
Q

What is an external influence in business?

A

Factors which cannot be controlled by businesses, but affect their operations

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2
Q

List the 10 external influences in a business environment

A
  • Economic
  • Financial
  • Geographic
  • Social
  • Legal
  • Political
  • Institutional
  • Technological
  • Competitive situation
  • Markets
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3
Q

Question: What are the impacts of high inflation on borrowing, investment, and customer spending?

A

Answer: High inflation leads to rising prices, which increase the cost of borrowing, hinder major investment, and reduce customer spending.

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4
Q

Question: How does low inflation encourage investment and consumer spending?

A

Answer: Low inflation results in falling prices, which decrease the cost of borrowing and encourage major investment and consumer spending.

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5
Q

Question: What happens to a country’s exports when its currency is depreciating?

A

Answer: When a country’s currency is depreciating, its exports become cheaper for foreign buyers, leading to increased exports.

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6
Q

Question: Explain the relationship between exchange rates and the cost of imports.

A

Answer: A depreciating currency increases the cost of imports because it takes more of the local currency to buy the same amount of foreign currency, making imports more expensive.

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7
Q

Question: Describe the impact of decreasing interest rates on consumer spending and business expenses.

A

Answer: Decreasing interest rates encourage consumer spending by lowering borrowing costs and reduce business expenses by decreasing interest payments on loans.

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7
Q

Question: How does increasing interest rates affect customer spending and business expenses?

A

Answer: Increasing interest rates reduce customer spending due to higher borrowing costs and increase business expenses due to higher loan interest payments.

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8
Q

Question: How can increased government expenditure influence consumer spending?

A

Answer: Increased government expenditure may lead to higher taxes, reducing consumer disposable income and resulting in less spending.

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9
Q

Question: What are the effects of decreased government expenditure on income and employment?

A

Answer: Decreased government expenditure can slow income and employment growth, leading to reduced consumer spending.

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10
Q

Question: During the expansion phase of the economic cycle, what happens to consumer confidence and business output?

A

Answer: During the expansion phase, consumer confidence and spending rise, and business output increases, leading to higher income and growth for businesses.

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11
Q

Question: Explain how a contraction phase affects consumer confidence and business output.

A

Answer: In a contraction phase, consumer confidence and spending decline, and business output decreases, resulting in lower income and challenging conditions for businesses.

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12
Q

Question: How can geographic location influence a business’s opportunities for expansion and profit?

A

Answer: Geographic location affects the availability of natural resources and opportunities for business expansion. For instance, Australia’s location within the Asia-Pacific has allowed businesses to expand, increase sales, and profit from trade with other Asian nations.

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12
Q

Question: How does an aging population impact businesses?

A

Answer: An aging population, like in Australia, results in a shortage of skilled employees and an increased demand for age-related services such as health and aged care.

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13
Q

Question: What are the benefits of globalisation for businesses?

A

Answer: Globalisation offers benefits such as increased competition, access to expanded markets, better labor availability, cheaper materials, and flexibility in choosing business locations.

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14
Q

Question: How can evolving social influences impact businesses?

A

Answer: Evolving social influences, such as rising female participation and increased cultural diversity, can impact consumer behavior and require businesses to adapt to changing customer preferences.

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15
Q

Question: What is one aspect of environmental concern that affects businesses?

A

Answer: Growing consumer awareness about the environment leads to an increased demand for ethical practices, which businesses need to consider in their operations.

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16
Q

Question: How do social trends influence businesses?

A

Answer: Social trends influenced by celebrities, new research, government policy, social media, and individual taste can shape consumer preferences, affecting businesses’ product development and marketing strategies.

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17
Q

Question: What are some areas covered by legislation that businesses must comply with?

A

Answer: Businesses are obligated to comply with legislation related to taxation, industrial relations, occupational health and safety, equal employment opportunity, anti-discrimination, and environmental protection.

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18
Q

Question: Why is it important for businesses to comply with laws?

A

Answer: Businesses must comply with laws to avoid fines, lawsuits, shutdowns, and reputational damage. Legal compliance also ensures businesses fulfill their responsibilities to stakeholders.

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19
Q

Question: How can political changes impact business confidence?

A

Answer: Political changes, such as shifts in government policies or leadership, can lead to uncertainty and affect business confidence.

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20
Q

Question: Provide an example of a political influence related to labor market reforms.

A

Answer: Labor market reforms, such as decentralization of wage determination and free trade policies, can impact businesses’ labor costs and access to international markets.

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21
Q

Question: What are the obligations of businesses to government at a State Level

A

State: Provision of employee entitlements, including workers compensation and OHS requirements, payment of payroll taxes, abiding by relevant state legislation and pollution controls.

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21
Q

Question: What are the obligations of businesses to government at a Federal Level

A
  • Federal: Payment of taxes (e.g., company tax and GST),
  • provision of employee superannuation,
  • observance of customer regulations, and
  • abiding by relevant legislation.
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22
Q

Question: What are the obligations of businesses to government at a Local Level

A

Local: Control over approving new developments, alteration to existing building applications, fire regulations, parking regulations, and size/location/shape of business signs.

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23
Q

Question: What is the role of the NSW Environment Protection Authority?

A

Answer: The NSW Environment Protection Authority is the primary environmental regulator for NSW. It aims to improve environmental performance and waste management through various programs and initiatives.

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24
Q

Question: What is the role of NSW Fair Trading?

A

Answer: NSW Fair Trading is a consumer protection agency in NSW. It provides information and assistance to all consumers to ensure fair and ethical business practices.

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25
Q

Question: What is the role of the Australian Securities and Investments Commission?

A

Answer: The Australian Securities and Investments Commission monitors market integrity and provides consumer protection in areas such as payment systems and financial services, including investment advice.

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26
Q

Question: What was the main aim of trade unions?

A

Answer: Trade unions aimed to improve working conditions and pay rates for employees.

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27
Q

Question: Why has union membership declined over the past 20 years?

A

Answer: Union membership declined due to factors such as new legislation outlawing compulsory unionism, changes in work patterns (increased part-time and casual work), and the prevalence of workplace agreements.

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27
Q

Question: What is the role of trade and industry associations?

A

Answer: Trade and industry associations are national bodies representing larger groups of employers. They lobby the government on specific issues and provide collective representation for businesses.

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28
Q

Question: Provide examples of trade and industry associations.

A

Answer: Examples of trade and industry associations include the Australian Chamber of Commerce and Industry, National Farmers’ Federation, and Australian Industry Group.

29
Q

Question: What are some examples of technological advancements that have impacted businesses?

A

Answer: Examples include robotics, telecommunications, and internet/e-commerce.

30
Q

Question: How have rapid advances in information technology (IT) affected business operations?

A

Answer: Rapid IT advances have reduced communication delays and enabled interactions between suppliers and customers over great distances.

31
Q

Question: How can businesses benefit from appropriate technology?

A

Answer: With appropriate technology, businesses can increase efficiency, productivity, create new products, and improve the quality and range of products and services.

32
Q

Question: Why do businesses aim to achieve a sustainable competitive advantage?

A

Answer: Businesses seek a sustainable competitive advantage to capture a larger portion of the market compared to their competitors.

33
Q

Question: Define a monopoly in terms of the number of competitors and concentration.

A

Answer: A monopoly exists when one firm holds complete concentration in an industry, having no competitors.

34
Q

Question: What is an oligopoly, and how does it differ from other competitive situations?

A

Answer: An oligopoly occurs when a small number of larger firms control a market, giving them greater influence. It differs from other situations due to limited competition.

35
Q

Question: Describe monopolistic competition and provide an example.

A

Answer: Monopolistic competition involves a large number of buyers and sellers in a particular market. Retail shops and clothing stores are examples.

36
Q

Question: What characterizes a perfect competition market?

A

Answer: In a perfect competition market, there are a large number of small firms selling similar products. Price differentiation is a key strategy.

37
Q

Question: Define ease of entry in the context of business competition.

A

Answer: Ease of entry refers to the ability of individuals or groups to establish businesses within a specific industry.

38
Q

Question: How does the ease of entry vary among monopoly, oligopoly, and monopolistic/perfect competition?

A

Answer: In a monopoly, no competitors can enter due to the firm’s control over resources. Oligopolies have difficult entry, while monopolistic/perfect competition markets offer easier entry due to smaller, affordable businesses.

39
Q

Question: Differentiate between local and foreign competitors based on location and competition.

A

Answer: Local competitors operate within the same market and deal with similar variables. Foreign competitors are located overseas and compete with local businesses in Australia.

40
Q

Question: How can a business’s marketing strategies be influenced by competitors?

A

Answer: Businesses may adopt marketing measures based on their competitors’ strategies, such as using social media and TV advertising for greater exposure.

41
Q

Question: What factors determine the type and extent of marketing strategies a business employs?

A

Answer: The size of the market, business, number of competitors, and nature of products influence the type and extent of marketing strategies.

42
Q

Question: How have financial markets evolved in Australia, particularly in terms of globalization?

A

Answer: Financial markets have become more global since the deregulation of the Australian financial market in 1983, allowing foreign banks like ING, HSBC, and ARAB BANK to operate in Australia.

43
Q

What are the internal influences in a business?

A
  • Products
  • Location
  • Resources
  • Management and
    business culture
44
Q

Question: How does the type of goods and services produced affect a business’s internal operations?

A

Answer: The type of goods and services produced impacts factors like physical space requirements, especially for manufacturing, which depends on the size of the goods.

45
Q

Question: How does the influence of the product manifest in the structure of a business?

A

Answer: The influence of the product is reflected in the type of business, whether it’s a service provider, manufacturer, or retailer. For instance, the structure of a clothing manufacturer differs from that of a clothing retailer.

46
Q

Question: How does the size of a business relate to the range and type of goods and services produced?

A

Answer: The size of a business is influenced by factors like the range and type of goods and services produced, the level of technology used, and the volume of production. Larger businesses produce more, affecting their internal operations.

47
Q

Question: Why is a good location considered an asset for a business?

A

Answer: A good location leads to higher sales and profits for a business, making it an advantageous asset.

47
Q

Question: Explain the importance of visibility for different types of businesses.

A

Answer: Retail businesses need visibility to attract customers, often being located in prime shopping areas. In contrast, manufacturing companies don’t rely on visibility and may choose low-visibility spaces suitable for production.

48
Q

Question: How does the cost of location vary based on business type?

A

Answer: Businesses located in busy areas incur higher lease or purchasing costs. Manufacturers may opt for larger, cheaper, low-visibility sites. Online stores, unaffected by location, don’t face this cost factor.

49
Q

Question: What is the significance of proximity to suppliers for businesses?

A

Answer: Businesses requiring significant raw materials for production benefit from being located close to suppliers, reducing the cost of transporting these materials.

50
Q

Question: How does proximity to customers impact different types of businesses?

A

Answer: The importance of proximity to customers varies; retail businesses benefit from being close to customers, while manufacturing or wholesaling businesses might find it cheaper to transport products to customers.

50
Q

Question: Describe the role of proximity to support services for businesses.

A

Answer: Support services assist core business operations. Small businesses often rely on external services, while larger businesses provide their own or outsource. Technological advancements have reduced the importance of physical proximity to such services.

51
Q

Question: How have businesses responded to rapid technological advances and increased global competition in terms of their management structure?

A

Answer: Businesses have adopted flatter organizational structures with fewer levels of management. This enables quicker adaptation to changing consumer needs and market conditions by reducing the number of decision-makers.

51
Q

Question: What are the key categories of resources that businesses combine to produce goods and services?

A

Answer: The categories of resources include Human Resources, Informational Resources, Physical Resources, and Financial Resources.

51
Q

Question: What advantage does a flatter organizational structure offer to businesses?

A

Answer: A flatter structure allows for faster adaptation to changing conditions due to reduced layers of management, leading to quicker decision-making and increased responsibility among individuals.

52
Q

Question: Provide examples of Human Resources within a business.

A

Answer: Examples of Human Resources include employees at various levels, from players to cleaners, who contribute to the business’s operations.

52
Q

Question: What does Informational Resources encompass in a business context?

A

Answer: Informational Resources involve knowledge and data necessary for the business, such as market research and sales reports.

53
Q

Question: Illustrate Physical Resources with examples.

A

Answer: Physical Resources comprise equipment, machinery, buildings, and raw materials essential for the business. Examples include trucks and musical equipment.

54
Q

Question: Explain the role of Symbols in business culture.

A

Answer: Symbols are events or objects that represent important aspects of the business, helping to reinforce its values and identity.

54
Q

Question: Provide an example of a component of business culture.

A

Answer: Values, as a component of business culture, include shared beliefs like honesty, hard work, teamwork, and quality customer care.

55
Q

Question: What does Financial Resources refer to?

A

Answer: Financial Resources encompass the funds a business employs to meet its obligations to creditors, including elements like budgets and grants.

56
Q

Question: Define business culture and its components.

A

Answer: Business culture encompasses shared values, ideas, expectations, and beliefs within an organization. Components include Values, Symbols, Rituals, Rites and Celebrations, and Heroes.

57
Q

Question: What are Rituals, Rites, and Celebrations within business culture?

A

Answer: These are routine behavior patterns that are part of everyday business life, including gatherings and events that emphasize the company’s values and shared experiences.

58
Q

Question: How can management contribute to developing and maintaining business culture?

A

Answer: Management plays a role in developing business culture by training employees, reinforcing values, and rewarding staff for aligning with the desired cultural traits.

58
Q

Question: How are external stakeholders different from internal stakeholders?

A

Answer: External stakeholders are entities outside of the business who are concerned about or impacted by its performance. They can include government, customers, society, employer associations, unions, creditors, the environment, and customers.

59
Q

Question: Define the term “stakeholder” in the context of a business.

A

Answer: A stakeholder is any group or individual with an interest in or affected by a business’s activities. Businesses are expected to act ethically and prioritize the interests of all stakeholders.

59
Q

Question: What are some examples of responsibilities that businesses have towards shareholders?

A

Answer: Businesses must hold annual general meetings where shareholders can voice concerns and ask questions. They must also ensure a sustainable and fair return on investments, providing a share of profits and dividends.

60
Q

Question: What defines internal stakeholders in a business context?

A

Answer: Internal stakeholders include individuals or groups within the business who have a vested interest in the company’s activities, such as managers, employers, and employees.

61
Q

Question: Outline the responsibilities businesses have towards managers.

A

Answer: Businesses should educate managers about ethical responsibilities and legal requirements, offer job-specific training, provide fair income (pay), and ensure they have sufficient resources to perform their roles effectively.

62
Q

Question: What responsibilities do businesses owe to employees?

A

Answer: Businesses should provide fair pay, proper training, and skill enhancement opportunities. They must maintain a safe working environment, treat employees fairly, provide for their needs, and abide by anti-discrimination laws.

62
Q

Question: Explain the responsibilities towards consumers.

A

Answer: Businesses should offer safe, functional, and quality products that are environmentally friendly and ethically sourced. They must stay updated with consumer trends to meet needs and treat consumers fairly.

63
Q
A
63
Q

Question: How can businesses demonstrate responsibility towards society?

A

Answer: Businesses can show concern and protection for the environment by participating in community projects and activities, including fundraisers that benefit society.

64
Q

Question: What responsibilities do businesses have towards the environment?

A

Answer: Businesses should develop and adopt ecologically sustainable operating practices and policies, demonstrating a commitment to protecting the environment.